Understanding Healthcare Reform

Small employers are defined under the Patient Protection and Affordable Care Act (ACA) as companies with less than 50 full-time employees, or full-time and full-time equivalent employees (FTE). Please see the box ___ to determine if you are a small business employer under ACA. These businesses are not subject to any of the penalties under the law. That’s right, no penalties!

Despite this stipulation, these business owners will be faced with important decisions in 2014:

Will they continue to offer health insurance?

How will they purchase insurance – from their broker, on the Health Insurance Marketplace (HIM which is also known as the “Exchange”) or online?

A projection made by MEDcom, a benefits consulting firm, is that it is likely that many low wage blue collar industries will opt to discontinue benefits, while gray collar industry will have mixed results, and white collar firms will continue to offer coverage.

Projections as to how coverage will be purchased are not definitive. The choices are to either purchase products in the HIM or outside of it. Inside the HIM, they can chose to use a broker, navigator, go online. That raises the question of who are these “navigators” and how do they differ from a broker? The official explanation is that navigators are only allowed to give information about the plans in the Exchange and assist in enrolling you. They are not supposed to give advice or discuss plans outside the Exchange. Navigators will be given approximately 35 hours of training and are not required to be insurance licensed or carry errors and omissions insurance.

Plans in the HIM will be based on metallic levels—bronze, silver, gold and platinum—and all of these plans are required to have essential health benefits. In addition, certain employers may qualify for a temporary two year tax credit to offset the premium if they purchase insurance from the Small Business Health Options (SHOP) Exchange.

Benefits can also purchased in the non-Exchange marketplace and in New Jersey employers will also be able to buy partially self insured plans which are not subject to essential health benefits or metallic classifications. If you want to compare plans in the Exchange with those outside it, you will need to either talk to a broker or do it yourself

In some cases it may make sense to have a plan in place that is not affordable to all employees. If they go to the Exchange, they will most likely be eligible for subsidies. Incomes up to 400 percent of the Federal Poverty Limit are eligible. This means that a family of 4 earning $92,000 can get a subsidy! Since small employers aren’t subject to the $3,000 penalty that large employers pay, this might result in some cost savings.

Finally, if an employee chooses to discontinue coverage, employees will discover there are going to be some new and interesting ways to purchase health insurance. Of course, there will always be the traditional broker to advise them and online vendors. What will be new in 2014 is not just the HIM but individuals will be able to purchase health insurance in retail stores and kiosks in shopping malls. And, I am certain that someone somewhere is working on an app for that too!

By Patti Goldfarb, an employee benefits specialist, and owner of the Employee Benefits Advisors Group.She has written and spoken about healthcare reform since its passage in 2010. If your business would like a consultation to make sure it is prepared for 2014, Patti can be reached at (201) 255-6239 or pgoldfarb@ebagroup.net.

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